International Journal of Management (IJM)

Volume 11, Issue 5, May 2020, pp. 222-229, Article ID: IJM_11_05_022
Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=5
Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
DOI: 10.34218/IJM.11.5.2020.022

© IAEME Publication Scopus Indexed

APPLICATION OF COMPUTER ASSISTED

AUDIT TECHNIQUES IN PUBLIC
ACCOUNTING FIRM
Bambang Leo Handoko and Ang Swat Lin Lindawati
Accounting Department, Faculty of Economics and Communication
Bina Nusantara University, Jakarta, Indonesia

Mazlina Mustapha
Department of Accounting and Finance, Faculty of Economics and Management
Universiti Putra Malaysia, Selangor, Malaysia

ABSTRACT
Facing the industrial revolution 4.0, every profession in the world must improve,
every professional workforce involved in it, must begin to add one skill that is
computer literacy. This phenomenon certainly occurs also for the financial auditor
profession. Auditors are required to no longer only carry out the audit process
manually or traditionally but to use computerization. In auditing this is referred to as
computer assisted audit techniques. Our research is a qualitative study, we use
literature studies as secondary data and primary data collection techniques. Primary
data collection is done by observation to public accounting firms and conducting
interviews with auditors to find out how the application of audit software in their
environment. Our interviews include: understanding, constraints faced, and the
auditor's views regarding the audit software itself. In this study we obtained results
regarding the advantages and disadvantages of the computer assisted audit technique
and a review of its application in public accounting firms in Indonesia both the big
four and the non big four. Our research can be a reference or reference for
subsequent research in the field of audit and software.
Key words: Audit, software, industry, technique, computer, assisted
Cite this Article: Bambang Leo Handoko, Ang Swat Lin Lindawati and
Mazlina Mustapha, Application of Computer Assisted Audit Techniques in Public
Accounting Firm. International Journal of Management, 11 (5), 2020, pp. 222-229.
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 Application of Computer Assisted Audit Techniques in Public Accounting Firm

1. INTRODUCTION
Audit is an activity to reveal whether the information or activities that occur are not in
accordance with the benchmarks that have been designed so that it can produce information
about the cause of the discrepancy between the activity and the specified benchmarks. [1],
stated that the audit is selecting and reporting discrepancies between information and
standards through the collection and evaluation of evidence information.
It is undeniable that we live in an era that is fast paced and practical. The need for
computer technology is needed to support daily work from the simplest to the most
complicated. There are three eras of economic growth, namely the agricultural era, the
industrial era, and the information era. In the third era, information technology is very
important because it facilitates and enables companies to collect and analyze data and
information [2].
The practice of accounting implementation in the current era focuses on facilitating the
transformation of resources and methods. This allows the formation of companies on a
network form basis so that there is a fast and large movement of elements.
The development of information technology has led to practicality and convenience in
audit activities, namely Computer Assisted Audit Techniques (CATTs). CATTs is the use of
computer technology in audit activities to obtain audit evidence making it easier for auditors
to collect and analyze electronic-based information. Therefore it is important for auditors to
understand the workings of Computer Assisted Audit Techniques to use and evaluate
electronic-based data.
The Public Accountant Professional Standards (SPAP) also emphasized the need for an
auditor's understanding in examining a computer-based accounting system. This technique is
known as Computer Assisted Audit Techniques (CAATs). The use of CAATs will increase
the efficiency and effectiveness of auditors in carrying out audits by utilizing all capabilities
possessed by the computer. Combining this understanding of the importance of audit
expertise with computer-based information systems knowledge will result in a very
significant increase in the information system audit process [3]. The preparation of
information systems auditors to have these skills must be prepared in advance to be able to
carry out the tasks of an information system audit [4]. Actually in addition to ACL software
there are also other software such as IDEA, CA Panaudit Plus, Monarch Software and many
others, but most of the functions are the same, namely interrogating data that is processing
databases for specific purposes.
There are also considerations in the use of CAATs in every company in Indonesia. If
referring to Public Accountant Professional Standards cited in [5] include also in PSA No. 57
concerning Auditing in a Computer Information System Environment, in paragraphs 04
through paragraph 06 describes the level of skills and competencies that auditors must possess
when carrying out an audit in a computer information system environment and provides
guidance when delegating work to assistants with system skills computer information or when
using work carried out by other independent auditors or experts who have expertise in the
field of computer information systems Specifically, auditors must have sufficient knowledge
to plan, implement and use the results of the use of CAATs. The level of knowledge that the
auditor must have depends on the complexity and nature of the CAATs and the entity's
accounting system [6].
Therefore, the Auditor must realize that the use of CAATs in certain circumstances can
require that he has far more computer knowledge than he has in other circumstances.
The auditor must also consider the suitability of computer facilities and computer-based
business process systems as needed, to be considered by the auditor planning the use of the

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 Bambang Leo Handoko, Ang Swat Lin Lindawati and Mazlina Mustapha

CAATs for the client entity, so that the auditor has reasonable expectations that the CAATs
can be used during the audit.
Many computerized systems for carrying out certain tasks do not produce visible
evidence. So in this situation, it is not practical for the Auditor to do the testing manually.

2. LITERATURE REVIEW
2.1. Auditing
According to [7] is a systematic process for obtaining and evaluating evidence relating to
assertions about economic actions and events objectively to determine the level of
appropriateness between those assertions with the criteria that have been determined and
communicating the results to interested parties.
According to [8], in terms of the extent of the audit, the types of audits can be
distinguished from:
1. General Audit, which is a general audit of financial statements conducted by an
independent Public Accountant Office (KAP) with a view to providing an opinion on the
reasonableness of the financial statements as a whole.
2. Special Audit, which is a form of audit that is only limited to the request of the auditee
conducted by the Public Accounting Firm by giving an opinion on the part of the audited
financial statements, for example an examination of the company's cash receipts.
Still according to the same source, according to [8], in terms of the type of examination,
the types of audits can be distinguished from:
1. Operational Audit (Management Audit), which is an examination of a company's
operational activities, including accounting policies and operational policies that have been
determined by management with a view to knowing whether operations have been carried out
effectively, efficiently and economically.
2. Compliance Audit, which is an examination conducted to find out whether the company
has complied with the regulations and policies in force, both those stipulated by the
company's internal parties and external company.
3. Internal Audit, which is an examination conducted by the company's internal audit
department that includes the financial statements and accounting records of the company
concerned and compliance with management policies that have been determined.
4. Computer audit; which is an examination conducted by the Public Accounting Firm of
companies that process accounting data using the Electronic Data Processing (EDP) system.

2.2. Computer Assisted Audit Techniques

Computer Assisted Audit Technique (CAATs) is a technical or virtual technique used to test
internally from an application of a good computer all directly or non-logically used to process
data [9].
CAATs when described simply is the use of computers in auditing activities that are
useful for collecting and evaluating data in the form of electronics in order to be proven audit.
This is needed in order to obtain and evaluate data in electronic form. Therefore, auditors
must know the techniques by which they can experiment with analyzing electronic data called
Computer Assisted Audit Techniques.
CAATs can also be interpreted as the use of certain software tools that are carried out to
test the test of control and the substantive test.

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 Application of Computer Assisted Audit Techniques in Public Accounting Firm

2.3. CAATs Activities

Activities that can be carried out with CAATs [10]:
 Audit sampling, the computer plays a role in calculating sample parameters, selecting
samples and assessing sample results.
 Simulation, the computer is used in assessing software owned by clients.
 Collection of data to be tested
 Analysis of the analysis
 Preparation of examination paper
 Calculation, comparison and manipulation of data.
 Analysis of calculations
 Project information such as budget and time monitoring.
 Standard audit correspondence
 Check data completeness, consistency, allocation and accuracy.
 Check the formula
 Comparing data integrity
 Overview, sort, merge, split, ratio for data analysis
 Comparing data between various audit procedures performed.

3. RESEARCH METHODOLOGY
3.1. Type of Research
The research method used is qualitative research whose research procedures are descriptive
qualitative, namely by studying, describing, analyzing and explaining the data obtained

3.2. Data Source

Source of data used in this study are primary data and secondary data. Primary data is data
obtained directly from the company that is the object of research.
 Conducting field research by collecting information directly
 Observation directly.
 Conduct interviews with related employees/auditor and are responsible for operational
activities in public accounting firm.
Secondary data is information data obtained through documentation such as published
independent auditor’s report, paper from previous study, literature, audit documentation,
working paper [11].

3.3. Data Analysis Method

The data analysis method in data collection used in this study is as follows
1. Literature Review (Library Research)
In this study the authors conducted data collection by reading, searching and studying data
and information both from international journal, books and media such as the internet related
to computer assisted audit techniques.
2. Field Research
In this study conducted in several ways, namely
a. Interview

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 Bambang Leo Handoko, Ang Swat Lin Lindawati and Mazlina Mustapha

Conduct interviews with employees involved and take responsibility for the audit firm
operational activities of auditing client’s financial statement
b. Observation
Data collection is done by direct observation of the public accounting firm activities,
especially in the audit process using manual and computerized.
c. Documentation
Documentation is carried out to trace and vouch the documents related to activities in the
audit process

4. RESULT AND DISCUSSION

4.1. CAATs as Audit Procedure
The effectiveness and efficiency of audit procedures can be improved through the use of
CAATs in obtaining and evaluating audit evidence, for example:
Some transactions can be tested more effectively for the same cost level by using a
computer to check all or more transactions than if carried out manually. In applying analytical
procedures, transactions or account balances can be reviewed and printed reports for unusual
items in a more efficient way by using a computer when compared with the manual method.
The use of CAATs can make additional substantive testing procedures more efficient than if
the auditor puts trust in the controls and tests the controls concerned

4.2. Application of CAATs in Indonesian Public Accountant Work

The use of Computer Assisted Audit Techniques (CAATs) has begun to be applied in public
accounting firms in Indonesia; especially public accounting firms have many clients due to
the large amount of data so it will take time if they do not use computer assistance.
The use of CAATs is expected to increase the efficiency and effectiveness of auditors in
carrying out audits by utilizing the capabilities of the computer. Combining understanding of
the importance of audit expertise and knowledge of computer-based information systems will
result in a significant increase in the computerized audit process. But there are still obstacles
in its implementation due to the use of audit software which is still lacking in the CAATs
environment. There is a need to make use of these technologies to maximize their benefits.
When compared with CAATs in large cities, such as Jakarta and Surabaya, which have often
been in contact with computerized audit technology, it can be said that CAATs in the regions
are still lacking in the habit of using these technologies.
There are two types of CAATs that are more commonly used in audits:
(1) Audit software is used by auditors to process audit data and the company's accounting
system. The software is divided into 2 namely: expert programs and utility programs. The
expert program is designed to carry out audits on conditions that require the use of the
program or in certain conditions while the utility program is a program used by the company
to sort, create and print data.
(2) Test data is used with the aim of inputting data into the company's computer program.
When output is obtained, it must compare with the previously found output. For example,
such as testing special controls in computer systems (passwords and access restrictions),
testing transactions that are not processed to determine the characteristics of corporate system
governance.
In general, Computer Assisted Audit Technique Tools (CAATs) is any use of information
technology as a tool in audit activities. CAATs can also be defined as the use of tools and
techniques to audit computer applications and retrieve and analyze data. In other words,

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 Application of Computer Assisted Audit Techniques in Public Accounting Firm

CAATs is a device and technique used to test (both directly and indirectly) the internal logic
of a computer application used to process data [12].
If the auditor chooses to use a computer-assisted audit technique, the auditor can choose
the approach it uses, i.e. whether to do application testing or do substantive testing.
If the auditor chooses to test the application, there are several approaches that can be taken
including:
 Test Data. This method uses input data prepared by the auditor and tests the data with
a copy of the auditing application software. The results of the data processing will be
compared with the auditor's expectations. If there are inappropriate results, this might
be an indication of logic deviation or control mechanism.
 Integrated Test Facility (ITF). It is an automated engineering approach that allows the
auditor to test the flow of logic and control of an application during normal operations.
 Parallel Simulation (PS). This approach requires the auditor to create a program that
simulates certain key functions of the application being tested.
Meanwhile, to conduct substantive testing (for example transaction details or estimated
balances), the auditor can choose the technique:
 Embedded Audit Module (EAM). Is a technique in which one or more specific
program modules are embedded in an application to record separately a series of
transactions that have been determined into a file that will be read by the auditor
 Generalized Audit Software (GAS). Is an approach that uses a particular software that
is used to select, access, organize data for the benefit of substantive testing. This
approach allows the auditor to access and retrieve various data files into the computer
and then perform various tests as needed. This approach is the most popular technique
because it is relatively easier because there is no need for deep computational
engineering skills.
When viewed from the side of the internal logic testing process of an application, the data
test techniques, ITF, PS and EAM are the techniques of testing the application's internal logic
directly while the GAS technique is an indirect testing technique. GAS is called the indirect
testing technique because it is more likely to take the output from the application and then
reprocess it to test whether the output is in accordance with the specified test criteria. This
paper specifically discusses the use of GAS-based CAATs that is commonly used by public
accounting firms, especially large public accounting firms that really need the use of this
technique to speed up the completion of their audit work.

4.3. Benefit of CAATs

We do interview and observation in public accountant office big four and non big four. We
gather data from interview result with the auditors. The summary of the result regarding the
advantages or benefits of CAATs in audit work are as follow:
The advantages of CAATs: For a database that contains thousands of transactions, which
is not possible manually, CAATs are very helpful for focusing audits. CAATs are able to
check 100% of all transactions in a database [13]. CAATs are able to provide information for
data analysis and viewing data profiles. Efficient time for a faster audit process
Benefits: testing transaction details and balances, such as the use of audit software to test
all (a sample) transactions in a computer file; Analytic-like review procedures, the use of
audit software to identify elements or unusual fluctuations; Testing of control of the general
control of computer-like information systems, the use of test data to test procedures for
accessing program libraries; Testing of controls over the control of computer information

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 Bambang Leo Handoko, Ang Swat Lin Lindawati and Mazlina Mustapha

system applications, such as the use of test data to test the functioning of preprogrammed
procedures; Accessing files, i.e. the ability to read files with different records and different
formats; grouping data based on certain criteria, organize files, such as sorting and combining,
create reports, edit and format outputs, making equations with rational logical operations
(example: AND; OR; =; <>; <;>; and IF).

4.4. Disadvantages of CAATs

However, Computer Assisted Audit Techniques (CAATs) are also inseparable from the
shortcomings. Even though CAATs is a modern audit technique with various advantages
compared to manual auditing, it must still be recognized that auditing with this technique still
has limitations.
These limitations include the absence of a "silver bullet" in developing the ability to
master Generalized Audit Software (GAS) software for audit staff. This software generally
need to be studied for a long time, so a KAP who wants his staff to be proficient in mastering
these GAS software must "invest" a large amount of funds to equip them with a series of
trainings on the use of this software. . In some cases, the training actually becomes useless
because it is not directly practiced in the audits conducted [14]. This is because to become
proficient, this software require continuous development and maintenance of expertise.

5. CONCLUSION
5.1. Conclusion
Computer Assisted Audit Techniques (CAATs) are the use of computers in inspection
activities. CAATs were a tool that helps inspectors in achieving examination objectives.
CAATs refers to special inspection procedures for testing information technology
components, namely data and programs. TABK has the usefulness or benefits, including
testing the details of transactions and balances, analytical review procedures, testing of data
(control of the test) for controlling the data, making and editing, making and editing files,
editing and editing, making and editing files, editing and editing, making and editing files,
editing and editing, making and editing files, editing and editing, making and editing files,
editing and editing.
In Indonesia itself, there are regulations for the adoption of CAATs applications. The
regulations include SPAP (2001) which defines Computer Information System (CIS), then
SPAP SA Section 335 Paragraph 03 on the impact of SIK environment, Article 1 Regulation
of the Minister of Finance Number 199 / PMK.03 / 2007, BPK Regulation Number 1 of 2007
concerning Standards for Inspection of State Finances (SPKN) Paragraph 56, and SPAP SA
Section 335 Paragraph 10 [15] which states the effectiveness and efficiency of audit
procedures is improved through the use of CAATs in obtaining and evaluating audit evidence.
The last thing is there is some weakness in TABK, namely cost, time, and auditor
competency, and computer literacy.

5.2. Suggestion
Since the world has entered the digital age wherever it has used technology, Indonesia must
continue to pursue and continue to develop its technology specifically in the field of auditing.
However, according to our point of view, CAATs in Indonesia has begun to be treated well
because in most companies, it is all by system, so the audit must also use the system to make
it easier.
Public accounting firm partners if you want to support the use of CAATs must be willing
to invest in software and hardware. Of course this is not cheap, but for the future, this
investment will enable the accounting firm to compete better. The effectiveness and efficiency

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 Application of Computer Assisted Audit Techniques in Public Accounting Firm

of the auditor's work increases. Availability of work with shorter time, means more work can
be handled, and more income for public accounting firms.

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